Bryan Doherty; Low Yields, Shutdown Could Rally Soybean Prices

USDA raised its soybean stocks in the Sept. 30 report, however, domestic stocks are still historically tight. Where do you see the bottom end of value for spot soybeans through year end, and can contract highs be tested?

The bottom-end value for soybeans will likely occur over the next two weeks without weather related harvested delays. Yield numbers, to date, appear to be tipping the scales as better than expected. Yet with stocks from 2012/13 historically tight and most farmers having sold ahead, downside price potential is also limited. Export activity to date has been great. It will be at least four to six months before the southern hemisphere crop is available to the world.

With the recent setback in price and a low U.S. dollar the stage is set for continued strong usage overseas usage. Livestock values have rallied in recent months suggesting more expansion possibilities and therefore more domestic usage. If upper Midwest yield results reflect the uncertainty of dry August weather, we wouldn’t rule out a rally to new highs, especially if the government shutdown comes to an end. The key however is how aggressive importers and or domestic users will be to lock in needs sooner than later.

When and where do you expect a seasonal low to be formed in the corn market?

It’s likely a "seasonal low" will occur by mid-November. With the crop behind schedule and expectation for some weather harvest delays downward price pressure is still likely ahead for corn. For many, corn has been slow to dry so the bulk of corn harvest will be the last two weeks of October.

What market impact will be caused by the Oct. 11 report delay?

Initially, probably more sideways trade for prices. I believe there will be a more concentrated effort to survey farmers by the media and others. This information will creep into the market place. More attention will be paid to private estimates as well. In general when there is political uncertainty the markets don’t really "like" it and consequently prices have a tendency to work lower as traders stay on the sidelines.